Are you due a spending makeover?


The question ‘do I need a spending makeover?’ is one that we should all ask ourselves regularly. New financial products are being introduced, there are always inviting incentives to switch providers and, of course, credit card balance transfer deals such as those to be found here.

Circumstances too might have changed. Saving to buy a house, or a baby on the way, are just two life-changing events that will probably need a bit more financial care and planning.

Any financial overhaul should address debt first. If you are in debt, then the priority is to pay off any loans before starting to save. With savings interest rates so low, clearing debt is certainly the most efficient way of maximising your money’s potential.

If you don’t pay off your credit card bill every month and have accumulated a balance, then you should look at switching to a provider with a 0% rate on balance transfers. This can typically give you 18 months or more to spread over the cost. Remember, there will probably be a balance transfer fee and other fees payable, so be sure to do your research.

If you do have savings, or want to start saving, then keep a very close eye on the interest rates. Many accounts have an introductory bonus, so if you open one of these products then keep a note of when it’s due to expire and be prepared to switch to a better rate.

Fixed term products often offer better interest rates, but make sure you definitely won’t need the money before the term expires, or you could pay a hefty penalty to get hold of it.

If you pay tax, then it makes sense to put your money into a Cash ISA, which allows you to save without paying tax on the interest you earn. You could consider moving money form a normal savings account into a Cash ISA if you don’t have one, but there are limits, currently £5340, on how much you can save each year.

If you aren’t a UK taxpayer, you should fill out an R85 form to prevent tax being deducted from the interest you have earned on your savings accounts.

Any spending makeover should involve a close look at your insurance and protection products. Always compare different providers when it’s time to renew your policies in a bid to find cheaper, but still comparable, cover and be prepared to switch to a better deal.

It’s probably not as inconvenient as you might think. If you’re taking out an insurance product for the first time, always compare products to make sure you get the most suitable and cost effective policy for you.

With soaring gas and electricity costs, utilities should also be regularly reviewed in a bid to shave a few pounds off the cost. Using the same provider for both and gas and electricity and paying by direct debit can both help to cut down the bills.

The biggest outgoing that many of us will ever have is a mortgage. Know your rate and any tie-ins there may be on the mortgage and investigate whether you can find a better product.

Look beyond enticing and eye-catching rates for any fees associated with the product and check which rate it will revert to at the end of any fixed or discounted rate term. You will also need to consider whether or not you want the security of a fixed rate, or to opt for a discounted or tracker rate deal.

This article was written by Sam, a financial writer based in the North-West, UK.